State and local revenues grow amid budget shortfalls

State and local government tax revenues showed signs of recovery as they increased during the last three months of 2010, according to The Washington Post.

Overall state and local tax revenue grew 1.6 percent to $378.3 billion during the fourth quarter of 2010 compared with the fourth quarter of 2009.

The gains in part resulted from increases in personal income tax receipts, sales tax receipts, gasoline taxes and revenue from liquor and tobacco taxes. Additionally, corporate income tax rose 14.3 percent, and state corporate tax revenue was $10.3 billion during the fourth quarter of 2010 compared with $9 billion during the fourth quarter of 2009.

However, state and local governments also are facing significant budget gaps, which have made it difficult to recover from huge revenue losses caused by the recession. These budget shortfalls have led to service cuts, as well as reduced pay and rights for public employees.

In addition, states face significant long-term costs in funding pension and health care obligations, and property tax revenue fell 2.9 percent to $177 billion during the fourth quarter of 2010 compared with the fourth quarter of 2009.

"Although state tax revenue is recovering, it is a little like falling off a cliff and climbing halfway back up," says Donald Boyd, senior fellow at the Rockefeller Institute of Government. "You're a long way from the bottom. But you also are a long way from the top."

Date : 4/8/2011


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